How corporations succeed by tackling big social problems

Kenny MacIver — October 2014

Corporations can do well by doing good, believes London Business School professor Lynda Gratton. And CIOs have a clear role to play in delivering on that.

Never before have corporations been so large, so wealthy, so powerful and so rich in human creativity and endeavor. And, for Lynda Gratton, professor of management practice at the London Business School, that means they are uniquely placed, not just to build their own resilience and prosper, but also to leverage their core capabilities to tackle some of the world's toughest social and environmental problems.

Plenty of ‘next-generation’ business leaders are already thinking along those lines, she says. “We’re seeing a real surge in interest in what corporations can do to solve big global problems” — something that hints at a fundamental shift in the relationship between big businesses and the societies they inhabit.

“We used to think about a company [solely in terms of] what happened inside it. Now consumers, employees, leaders and other stakeholders are increasingly thinking about what happens outside its walls,” says Gratton. “Not just in terms of its supply chain, but also about what happens in our communities and in the wider world.”

“Right across the world there were leaders who were saying: ‘Yes, I have something to say about climate change or water shortages in Africa or care for aging populations or youth unemployment,’” says Gratton, who is also founder of the Hot Spots Movement, a research and consulting team based in London’s Somerset House that helps organizations derive business value from academic insights.Leveraging capabilities

In her new book, The Key, Gratton identifies three clusters of unique capabilities that enable corporations to make an impact on chronic global problems:

• Innovate and researchFrom Netherlands-based life and material science company DSM sharing its know-how with the World Food Program to combat malnutrition to Japanese yogurt-maker Yakult using its Yakult Ladies supply chain to keep an eye on the welfare of the elderly in their communities, corporations have expertise and resources that can make a profound difference.

• Scaling and mobilizingOver many decades, large companies build robust distribution networks that take them into some of the most problem-filled areas of the planet. So, argues Gratton, when an aid organization needs to get water to children across Africa or establish emergency communications after a tsunami, those same companies — Coca-Cola, Danone, Shell, Vodafone and thousands more — have the ability to scale and mobilize like no other institutions.

• Alliance formingCompanies thrive on managing multiple stakeholders, building partnerships and dealing with organizational complexity. And that means that when trying to address really challenging issues that cannot be overcome by a single player, corporations that can form alliances and create knowledge teams across companies, disciplines and countries can have a hugely positive effect. One powerful example Gratton cites is that of recruitment company Manpower Group and the powerful consortium of NGOs and Fortune 500 companies it has formed in an effort to combat human trafficking.Underpinned by technology

Technology, of course, increasingly underpins all three of these capabilities, which means that CIOs, with their access to software development teams, cloud resources, data processing cycles, communications and collaboration networks, supply chain management systems and more, are uniquely placed to be the enablers of such initiatives.

But such activity is more than just altruism. Research by Gratton’s colleagues at the London Business School and elsewhere shows a clear link between good corporate citizenship and profitability. The implication is that corporations that use their resilience in the service of global challenges increasingly attract the best talent (especially younger talent) that, in turn, fosters innovation and ultimately growth and profitability.

“You might say that it costs to do all that good stuff, and so companies who do a lot of social engagement will be less profitable,” she says. “But actually, the research shows that the reverse is true — companies that are good at citizenship tend to do better.”

That might be a generational thing, she observes. “There have always been some companies who have cared about the world they inhabit. But over the past five years or so we’ve seen a real shift in that, partly because there is a new generation of CEOs who care about the world, and partly because the young people — especially the talented ones — are asking before they join a company: ‘What are you doing to solve global problems?’ There’s a new group of leaders and they totally get it, and they want to build organizations that have some sort of meaning.”

• Lynda Gratton’s The Key: How Corporations Succeed by Solving the World’s Toughest Problems is out now.

Professor of management practice at London Business School, head of the Future of Work Research Consortium and best-selling business author, Lynda Gratton focuses on people-centric strategies for transforming companies.

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